9 Ways to Boost Your FICO Score

Your credit score it is one of the most critical factors in your financial life. It determines if you will be approved for a loan or line of credit. Credit scores are used to determine: if you will be hired for a job, interest rates, terms and conditions, downpayment costs, rates for medical and other insurance coverage, approval for cable and internet service and more. According to a survey by the Demos group 1 in 10 Americans are denied jobs due to their bad credit.

A credit score is a mathematically calculated number developed by the Fair Isaac Corporation (FICO) that lenders use to rate potential customers in determining the likelihood that a customer will pay their bills on time.

A credit score or credit rating is determined by using five main criteria as defined by MyFico.com: your payment history which accounts for 35% of your credit score, the amounts owed which accounts for 30% of your credit score, the length of your credit history which accounts for 15% of your credit score, new credit which accounts for 10% of your credit score, and the types of credit used which accounts for 10% of your credit score.

Payment history shows the history of how you paid your bills either on time or late but unfortunately does not show if your bills were paid before the due date. Amounts owed shows the total amount of credit you have available. The length of history indicates how long you have had credit. New credit indicates how many times you have applied for new credit. If you open too many new accounts in a short period of time this may lower your credit score. The types of credit used indicate the types of accounts you have such as revolving or installment accounts. Revolving accounts are usually credit cards and installment accounts are usually mortgages, auto loans, etc.

The FICO credit score model ranges from 300-850 with 850 being an excellent score and 300 being the worst score. The higher the credit score the lower the interest rate you will receive for a loan or line of credit. Possessing a good credit score can save you thousands of dollars in interest over the life of the loan or on a line of credit. A good credit score is generally in the range of 720 or above but may vary from lender to lender.

When applying for credit or a loan if all three credit scores are pulled, the middle score is generally the score used with the application.  Your credit score varies from each bureau because each agency collects their own data from various sources and may collect different data for the same account. Your score can vary anywhere from 5-40 points between the three credit bureaus.

Your credit score changes due to updates to your credit file which changes based on account activity such as balance changes or additions to your credit file (i.e. new accounts or deletion of older negative accounts more than 7 or 10 years old). As a result, you may see a difference in your score from one month to the next.  If you have bad credit or a low credit score here are 9 things you can do to boost your FICO credit score:

1. Review your Equifax, Experian and TransUnion credit reports at least once a year at www.annualcreditreport.com.  
2. Errors. Fix errors on your credit report. 
3. Keep total amount of debt owed low.  Keep credit card balances at 20% or less of the credit limit.
4. New Accounts. Number of new accounts opened. Don’t open more than one new account every 2 years.  If you are applying for a mortgage loan or credit card shop within a 2 week period, the inquiries will count as one inquiry (versus multiple inquiries). 
5. Denied. Don’t apply for credit if you know you will get denied the inquiry will temporarily lower your credit score.
6. Mix of accounts. You need a mix of revolving (credit card) and installment (loan) accounts to boost your credit score.
7. Payment history. You will need a payment history of at least 7 years or more with no late payments to have excellent credit. You will need a payment history of at least 3-5 years with no late payments to have good credit.
8. Length of credit history. You will need a credit history of 2 years or more to establish a decent credit history profile. 
9. Pay your bills on time. Get current on all late accounts.         

9 Ways to Increase Your FICO Credit Score

Your credit score it is one of the most critical factors in your financial life. It determines if you will be approved for a loan or line of credit. Credit scores are used to determine: if you will be hired for a job, interest rates, terms and conditions, downpayment costs, rates for medical and other insurance coverage, approval for cable and internet service and more.

A credit score is a mathematically calculated number developed by the Fair Isaac Corporation (FICO) that lenders use to rate potential customers in determining the likelihood that a customer will pay their bills on time.

A credit score or credit rating is determined by using five main criteria as defined by MyFico.com: your payment history which accounts for 35% of your credit score, the amounts owed which accounts for 30% of your credit score, the length of your credit history which accounts for 15% of your credit score, new credit which accounts for 10% of your credit score, and the types of credit used which accounts for 10% of your credit score.

Payment history shows the history of how you paid your bills either on time or late but unfortunately does not show if your bills were paid before the due date. Amounts owed shows the total amount of credit you have available. The length of history indicates how long you have had credit. New credit indicates how many times you have applied for new credit. If you open too many new accounts in a short period of time this may lower your credit score. The types of credit used indicate the types of accounts you have such as revolving or installment accounts. Revolving accounts are usually credit cards and installment accounts are usually mortgages, auto loans, etc.

The FICO credit score model ranges from 300-850 with 850 being an excellent score and 300 being the worst score. The higher the credit score the lower the interest rate you will receive for a loan or line of credit. Possessing a good credit score can save you thousands of dollars in interest over the life of the loan or on a line of credit. A good credit score is generally in the range of 720 or above but may vary from lender to lender.

When applying for credit or a loan if all three credit scores are pulled, the middle score is generally the score used with the application.  Your credit score varies from each bureau because each agency collects their own data from various sources and may collect different data for the same account. Your score can vary anywhere from 5-40 points between the three credit bureaus.

Your credit score changes due to updates to your credit file which changes based on account activity such as balance changes or additions to your credit file (i.e. new accounts or deletion of older negative accounts more than 7 or 10 years old). As a result, you may see a difference in your score from one month to the next.  If you have bad credit or a low credit score here are 9 things you can do to boost your FICO credit score:

1. Keep total amount of debt owed low.  Keep credit card balances at 20% or less of the credit limit.
2. New Accounts. Number of new accounts opened. Don’t open more than one new account every 2 years.  If you are applying for a mortgage loan or credit card shop within a 2 week period, the inquiries will count as one inquiry (versus multiple inquiries). 
3. Denied. Don’t apply for credit if you know you will get denied the inquiry will temporarily lower your credit score.
4. Mix of accounts. You need a mix of revolving (credit card) and installment (loan) accounts to boost your credit score.
5. Payment history. You will need a payment history of at least 7 years or more with no late payments to have excellent credit. You will need a payment history of at least 3-5 years with no late payments to have good credit.
6. Length of credit history. You will need a credit history of 2 years or more to establish a decent credit history profile.

7.      Pay your bills on time. Get current on all late accounts.

8.      Errors. Fix errors on your credit report.

9.      Review your credit reports at least once a year at www.annualcreditreport.com.

If you plan on purchasing a large item such as a car, house or investment property, it is best to pull your credit yourself to see if any negative items appear so you can fix those issues before applying for a loan. The best way to understand your credit score is to do research and read the information that is provided when you order your credit report.

Interpreting Your Credit Score

 

Your credit score it is one of the most critical factors in your financial life. It determines if you will be approved for a loan or line of credit. Credit scores are used to determine: if you will be hired for a job, interest rates, terms and conditions, downpayment costs, rates for medical and other insurance coverage, approval for cable and internet service and more.

A credit score is a mathematically calculated number developed by the Fair Isaac Corporation (FICO) that lenders use to rate potential customers in determining the likelihood that a customer will pay their bills on time.

A credit score or credit rating is determined by using five main criteria as defined by MyFico.com: your payment history which accounts for 35% of your credit score, the amounts owed which accounts for 30% of your credit score, the length of your credit history which accounts for 15% of your credit score, new credit which accounts for 10% of your credit score, and the types of credit used which accounts for 10% of your credit score.

Payment history shows the history of how you paid your bills either on time or late but unfortunately does not show if your bills were paid before the due date. Amounts owed shows the total amount of credit you have available. The length of history indicates how long you have had credit. New credit indicates how many times you have applied for new credit. If you open too many new accounts in a short period of time this may lower your credit score. The types of credit used indicate the types of accounts you have such as revolving or installment accounts. Revolving accounts are usually credit cards and installment accounts are usually mortgages, auto loans, etc.

The FICO credit score model ranges from 300-850 with 850 being an excellent score and 300 being the worst score. The higher the credit score the lower the interest rate you will receive for a loan or line of credit. Possessing a good credit score can save you thousands of dollars in interest over the life of the loan or on a line of credit. A good credit score is generally in the range of 720 or above but may vary from lender to lender.

When applying for credit or a loan if all three credit scores are pulled, the middle score is generally the score used with the application.  Your credit score varies from each bureau because each agency collects their own data from various sources and may collect different data for the same account. Your score can vary anywhere from 5-40 points between the three credit bureaus.

Your credit score changes due to updates to your credit file which changes based on account activity such as balance changes or additions to your credit file (i.e. new accounts or deletion of older negative accounts more than 7 or 10 years old). As a result, you may see a difference in your score from one month to the next.  If you have bad credit or a low credit score here are 5 things you can do to boost your credit score:

1.      Pay your bills on time.

2.      Get current on all late accounts.

3.      Pay more than the monthly minimum payment.

4.      Develop a plan to reduce your total debt.

5.      Keep your credit card balance at 20% or less of the credit card limit.

If you plan on purchasing a large item such as a car, house or investment property, it is best to pull your credit yourself to see if any negative items appear so you can fix those issues before applying for a loan. The best way to understand your credit score is to do research and read the information that is provided when you order your credit report.

5 Clever Ways to Raise Your Credit Score

If you do a search on the internet you will find thousands of websites that provide information on how to increase your credit score or repair your credit.  This means that there is something beneficial about having good credit.  Good credit increases your chances of being hired for a job, provides you with cash back rewards, provides good interest rate and terms, notices about sales or discounts and more. 

Your credit is your financial identity - your financial resume and is one of the most important aspects of your life.  It can help you or hurt you during the course of your life.  Credit affects many aspects of your life such applying for a home or apartment, or applying for a personal loan or credit.  Some people have been fired from jobs or have not been considered for employment because of their bad credit.  If you have bad credit it is never too late to fix it and improve your financial situation.  You can restore your credit and still achieve your financial goals.

The first step to repairing credit damage is by ordering a copy of your credit report from the three major credit bureaus, Experian, Equifax, and TransUnion at www.annualcreditreport.com. Review your credit reports carefully checking all information for accuracy such as: name, address, phone number, SSN, date of birth, current and previous addresses, accounts, account numbers, open and closed dates, status of the account, amount owed, and payment history.

Once you have reviewed your credit report determine if you have any past due accounts. If you have bad credit due to the loss of a job, health issues, family issues or a disability let the creditor know right away. Call the creditor to setup a payment plan to pay the debt.  Determine the monthly amount you can afford, but don't let the creditor determine the amount for you.

If you find errors on your credit report write a letter to the credit bureau that is reporting the error or request an investigation by disputing the information online at the credit bureau's website. Provide any supporting documentation to prove your claim. The credit bureau will respond to your letter within 30 days from the day of receipt. Keep copies of all correspondence sent and received in the event you need to reference it in the future. If you do not receive a response follow-up with a letter to the credit bureau to verify the updates were made.

Order another copy of your credit report after 45 to 60 days have passed to verify the updates were made. You can also write a letter to the creditor reporting the error.  If the creditor does not respond with 30 days you can request the credit bureau remove the account from your credit report based on the Fair Credit Reporting Act.

1. Establish Credit. Open a department store credit card. They usually have the highest interest rates but provide easier approval than bank credit cards.  Buy something small and pay the balance in full each month. You can also open a secured credit card account. Ensure the account is reported on your credit report.  Get a secured card with low fees and a low interest rate.
2. Pay down debt.  Keep balances at 20% or less of the credit limit. Having credit cards maxed out or close to the limit decreases your credit score. Pay the smallest bills first then work towards paying the larger bills.
3. Get current.  Pay late accounts which greatly lower your credit score such as bankruptcy, judgments, tax liens, foreclosures, repossessions and collection accounts.  Ask creditors to remove the accounts from your credit report after the account is paid in full to help increase your credit score.
4. Closing accounts.  Don't close accounts that have been open for 2 years or more and don't close accounts that are in good standing.  Closing accounts can decrease your credit score. 
5. Negotiate.  Ask creditors to settle the account for 50% of the total amount owed.  In exchange for payment ask the creditor to remove the account from your credit report and request a confirmation letter stating the account will be removed prior to making a payment. If the creditor refuses ask the creditor to report the account as “paid” or “paid in full”.

5 Tips to Make Your Credit Score Soar

Your credit score is one of the most important factors in your financial life.  There are lots of benefits to having good credit:  you don’t have creditors calling harassing you for payment, you get approved on the first try, you get good interest rates and terms and you get discounts and notifications about specials.

If you have good credit and a good relationship with your local bank or lender you also have more negotiating power to get the best rates possible. 

Unfortunately, many Americans are still feelings the effects of the recession and have bad credit.  This makes it difficult to get employed and get approved for credit or a loan. 

If you are already in debt, don't have an emergency fund, savings account or retirement account you need to reevaluate your spending habits. Order a copy of your credit report at least once a year from the 3 major credit bureaus: Experian, Equifax, and TransUnion at annualcreditreport.com or call 877-322-8228.

Seventy-five percent of Americans have at least one mistake on their credit report and seventy-percent of Americans have at least one major mistake on their credit report which can lower your credit score. 

While you are working on improving your spending habits you can also follow these 5 tips to help make your credit score soar so when the time is right you can make a purchase and get the best deal possible.

1. Change your mindset. You have to change the way your currently spend money and develop good spending habits so you make good choices when making purchases, buy in terms of needs vs. wants. Spend less than you earn.

2. Get current on late bills. Pay old or late accounts immediately such as collections, tax liens, and judgments. Setup payment plans for late bills that cannot be paid in full.

3. Establish credit. Open a secured account if you have bad credit or no credit to re-establish credit history.

4. Keep balances low. Keep credit card balances at 20% or less of the credit limit. This shows you have good spending habits are not seen as a credit risk.

5. Don't open new accounts. Don't open any new accounts more than once every year when trying to improve your credit score. You will be seen as a credit risk and this will lower your credit score.

Consumers Can Now Get Free Credit Score

Effective July 21, 2011, the Federal Trade Commission consumers can now receive free credit scores if they apply for a loan or credit and are denied as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Previously consumers could receive a free copy of their credit report but in some cases it is hard for consumers to determine if they had good or bad credit.

Loan providers and companies that offer credit must provide details of the credit score and why the consumer was denied. Bad credit and low credit scores mean consumers will get higher interest rates, possibly pay upfront fees and have less than favorable credit or loan terms. The credit score will include the factors that impacted the consumers’ credit score such as late payments or maxed out credit cards.

Under this new law, banks can no longer keep their in-house credit scoring models secret and must share these with consumers who are denied credit. The new law does not apply to telecommunication and insurance companies.

Allowing consumers to receive credit score will give them the ability to quickly see if they have good or bad credit and create a plan to increase their credit score.

Not all consumers can receive a free credit score. If you were approved for loan with less than favorable terms or if your loan or credit application is rejected you can get a copy of your credit score. If you have good credit you may not get a copy of your credit score. Here are 7 tips to increase your credit score:

1. Get current. Pay delinquent accounts such as judgments, tax liens, foreclosures, repossessions and collection accounts first. Then pay all other late accounts such as medical bills.
2. Pay down debt. Keep balances at 10-20% or less of the credit limit. Having credit cards with balances of 30% or more of the limit decreases your credit score.
3. Pay on time. Pay bills at least 7-10 days before the due date to avoid late fees and penalties.
4. New accounts. Opening more than one new account per year will lower your credit score.
5. Avoid closing accounts. Closing accounts that have been open for 2 years or more can decrease your credit score.
6. Negotiate. Setup payment plans to pay down debt if you cannot pay the full amount owed. Stick to the agreement until the account is paid in full.
7. Avoid risky solutions. Avoid filing for bankruptcy. Use bankruptcy, debt consolidation, credit repair counseling or debt settlement as a last resort. These are reported on your credit report and lower your credit score.